Employers making benefits strategy decisions in a health reform environment now have three options: they can continue to offer benefits, pay the penalty and exit the health benefit sphere or they can “pay differently” by entering the private exchange marketplace with a defined contribution approach.
“All that we are doing with health care impacts so much more than health care costs, health risk status and use of health care services – it impacts the business,” explained Bruce Sherman, MD, medical director of Employers Health Coalition.
Sherman, speaking at the Care Continuum Alliance Forum in Scottsdale, Ariz., advocated that employers carefully analyze these choices and consider the far-reaching implications of lessening their financial responsibility for population health.
“It is a very profound decision and once the employer decides to go to the exchanges, I don’t know if that employer will be able to go back. So if employers are thinking about this [switch], they need to think beyond the health care cost,” he explained.
The bigger question employers must consider: What’s the impact of health care on the larger business?
Sherman added that employers who pay to exit the health benefits environment, have “decoupled health from well-being.” They won’t have access to employee health claims and data, so their ability to design strategic wellness programs would be severely hampered.
For those employers who pay differently with a defined contribution approach and enter the private exchanges, they have capped their employer risk and reduced their administration burden just as those who decide to pay the penalty. However, in this early stage it is unclear whether they will have the ability to control costs because no one knows how well exchanges will perform. When an employer lessens their risk in health care benefits through a defined contribution approach, they also could minimize their role to innovate.
Health insurance exchanges have the opportunity to redefine the industry’s approach to patient engagement and wellness as a core component offering, however, Sherman worries that exchange consumers will have the wrong mindset when shopping for coverage. He said many people might choose a bronze plan for their immediate financial needs without considering their annual and future health expenses.
Sherman offered three questions employers must consider before making this important decision:
- Who will provide wellness services: the exchange or employer?
- Without data, how can employers evaluate the impact of wellness programs on their population?
- How can the value of wellness programs from a business perspective be measured in an exchange environment?
In order to retain the link between wellness and health benefits, employers who enter the private exchange marketplace could align incentives for wellness engagement in the form of greater defined contributions. They should strive for data sharing between the employer and marketplace to ensure optimal outcomes in population health are achieved. They should also ensure that wellness components are part of exchange offerings.
Even offering wellness as a voluntary offering will likely have low participation levels if not linked with overall health benefits design.
“If employers start to divorce themselves [from health and wellness], where are employees going to access these programs? What’s going to happen to workplace-provided programs if employers go to exchanges where wellness is also offered?” Sherman asked.
He suggested that employers would have to forge new partnerships in the post-ACA world and implement new metrics for determining wellness success that reflects business performance outcomes.
